Written Commentary
GOLD
Gold futures are higher, nearing all-time highs as expectations of a September interest rate cut from the Fed mount. Markets are currently pricing in a near 90% chance of a 25 bp cut from the Fed in September. Gold also continues to draw strong demand from central bank purchasing and geopolitical uncertainty regarding the situations in Ukraine and the Middle East. ISM manufacturing and services PMI data this week will also give an update as to how the economy has continued to weather under tariffs. Labor data due at the end of the week will be the decisive figure of data, potentially offering clues to how the Fed will move in September and to the extent of easing the economy could see from the Fed this year.
Last week’s PCE inflation data for July saw prices grow 0.2%, while core prices rose 0.3%. The data being in line with expectations adds further weight to the August labor report due on Friday for further clues as to how the Fed will move in September. Gold got a boost last week as following dovish comments from several Fed members. New York Fed Bank President John Williams that interest rates could fall at some point, but policymakers will need to gauge upcoming data. Fed Governor Christopher Waller said he favors starting rate reductions next month and “fully expects” further cuts to bring policy closer to a neutral level.
On the tariff front, a federal appeals court ruled on Friday that most of the president’s tariffs were illegal. The judges, however, allowed the tariffs to remain in place while the case moves through an appeals process. Treasury Secretary Scott Bessent said on Monday that he is confident that the Supreme Court will back President Trump’s use of emergency powers to implement tariffs.
COPPER
Copper futures are lower as the dollar gained but data from China struck a relatively upbeat tone. Purchasing managers surveys in China’s manufacturing sector showed an expansion of activity in August due to a rise in new orders, indicating healthier demand prospects for industrial metals. However, higher copper stocks outside of China have pointed to weaker demand elsewhere. LME-registered warehouses have seen copper inventories rise 75% since late June. COMEX stocks have nearly tripled so far this year. The larger inventories sitting in the US are likely to offer resistance to further gains for US copper, unless demand outside the US is strong enough for an outflow out of the US. Markets will look to ISM manufacturing data out of the US later today for clues to domestic demand.
Recent data from China has been mixed, industrial profits declined for a third straight month in July against a backdrop of weak demand and ongoing factory gate deflation. However, the declines were less than those seen in May and June. Top Chinese copper miner Zijin recently noted that copper demand in China remains robust on datacenters and electrification technologies, despite evidence of softer manufacturing activity per the latest official PMIs.
Chile’s mining regulator Sernageomin is raising its requirements for copper giant Codelco to restart areas of its flagship El Teniente mine after a deadly collapse. Codelco said it is working to gradually reopen the Andes Norte and Diamante sectors, after approvals from Sernageomin and the labor inspector’s office, but said its Recursos Norte and Andesita units remain closed. The state-run miner now expects 2025 production of 1.34-1.37 million metric tons of copper, down from a March estimate of 1.37-1.40 million tons, a trim of 30,000 tons on both ends.
SILVER
Silver futures are higher, following moves in gold as interest rate cut expectations from the Fed offered support for the white metal. Safe-haven demand also lent support to precious metals amid concerns over Fed independence and renewed uncertainty surrounding President Donald Trump’s tariffs.
On the macro-front, China’s industrial momentum remains strong, with recent data showing solar cell exports surged over 70% in the first half of the year, fueled by robust photovoltaic demand from India. This follows a record-breaking installation of more than 93 gigawatts of solar capacity in May—a 300% year-over-year increase—driven by a rush to connect panels ahead of upcoming policy changes that will tighten grid access.
On the supply side, global silver mine production has declined by 7% since 2016, contributing to an estimated shortfall of 800 million ounces between 2021 and 2025. Investor appetite remains resilient, with silver-backed exchange-traded products (ETPs) attracting net inflows of 95 million ounces in the first half of 2025. Since 2019, over 1.1 billion ounces have been withdrawn from mobile inventories.
Silver prices continue to find support from a persistent structural supply deficit and strong investor demand. Industrial usage is expanding, particularly in energy-related sectors such as solar power, electric vehicles, and electronics. Notably, solar applications accounted for 17% of total silver demand last year—triple their share from a decade ago.
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